Hong Zhang

Publication Date


Document Type


First Advisor

Dalal, Ardeshir J.

Degree Name

Ph.D. (Doctor of Philosophy)

Legacy Department

Department of Economics


China--Economic conditions--Computer simulation; Free trade--China--Computer simulation


The purpose of this dissertation is to investigate the impact on China's economy of the trade liberalization that is to follow China's accession to the World Trade Organization (WTO). The study is conducted within the framework of a 30-sector, single-country, static computable general equilibrium (CGE) model for China. In contrast to existing CGE studies on China's trade liberalization, which typically assume competitive markets, this study takes into account the incomplete formation of the market system, the existence of government intervention and imperfect competition, etc. It also uses more recent data than existing analyses. In particular, the benchmark year is 1998, and the actual schedule of China's trade barrier reductions is used. This study also incorporates more detailed specifications regarding foreign trade intervention, including tariff exemptions, non-tariff trade barriers, indirect taxes on foreign trade, tax rebates for exports, etc. Thus, this study tries to obtain a more realistic picture of the influences on the Chinese economy of the anticipated trade liberalization. The simulations of the CGE model provide some positive (rather than normative) conclusions. They predict that, due to the trade liberalization, China's real GDP and total employment will rise by small fractions, while the general price level will decline by a few percentage points. Total import value would rise by more than 10 percent, whereas total export value would rise by less than 10 percent. Therefore, China's trade surplus, though still positive, is likely to decline substantially and China's terms of trade may worsen slightly. On the other hand, China's degree of dependence upon foreign trade, measured by the ratio of foreign trade value to GDP, would rise by a few percentage points. The welfare impact of the predicted changes in the Chinese economy is not clear. Assessing this impact requires making normative judgments based on exogenously imposed criteria. Such an assessment is also complicated by the fact that China's decision to join the WTO is likely to have been influenced not only by economic, but also by institutional and political considerations. This could be a fruitful area for further research.


Includes bibliographical references (pages [137]-147)


ix, 180 pages




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